If you owe taxes to the Internal Revenue Service, a significant portion of that debt may consist of penalties. There are a number of penalties that the IRS and Revenue Agents regularly assert against delinquent or non-compliant taxpayers. Tax penalties can be abated in some circumstances, but it usually requires the assistance of an experienced tax lawyer. The mere request to forgive penalties will result in denial of penalty relief.

Pursuing Abatement of Tax Penalties

The IRS and Arizona Department of Revenue (ADOR) can assess penalties for taxpayers who fail to meet their tax reporting and payment obligations. Common circumstances that lead to the assessment of penalties include the following:

Failure to file a tax return or to timely file a tax return

Failure to pay your full tax liability on time

Failure of self-employed people to file and pay estimated taxes

Failure to pay over-employment taxes withheld from employees

Failure to file accurate taxes

Failure to file informational returns such as FBARs and other Offshore Tax Returns

Civil fraud or criminal tax evasion

Often, taxpayers have a valid excuse or explanation for their failure to file or pay their taxes on time. The Internal Revenue Code and the Arizona statutes authorize the abatement of penalties imposed by the IRS or ADOR in certain limited instances if the failure is due to “reasonable cause” and not “willful neglect.” For instance, you may have had a medical condition that prevented you from filing. Or you may have hired a tax return preparer to assist you and relied upon that person to correctly file your return. If you have a reasonable explanation for your failure to pay or file your return, we can help you pursue abatement of your penalties by communicating the facts and circumstances of your case, together with an analysis of acceptable case law, to the IRS.

Let the lawyers of McFarlane Law, PLC, seek abatement of your penalties due to reasonable cause and fight to get a reduction in the amount you owe. We have the experience to properly argue “reasonable cause” and obtain penalty relief for you.

Understanding Interest Charged by the IRS

Only penalties can be abated, not interest. The IRS has the statutory directive to charge interest on assessed taxes and penalties. Interest charges begin as soon as the IRS makes an assessment, which is the act of stating the amount of tax deficiency onto the IRS books. The same process is accomplished by the ADOR. From that point in time, interest accrues on the unpaid balance of assessed tax and assessed penalties.